8 Reasons Double Invoicing Happens and How to Avoid It

DAVID FAČKO

9 min

·

January 23, 2024

Small business owners have a lot to handle on their own financially. Many find themselves handling billing and invoicing along with other management duties.

Writing an invoice can be detailed enough, but things can get complicated when you have to send multiple invoices to people.

Double invoicing is a problem that could cost you time and money you can’t spare. Luckily, we’re here to help you get your duplicate invoices under control.

Dive into our article to swiftly resolve double invoicing in your business!

What is double invoicing?

Double invoicing, also termed as duplicate invoicing, is a critical issue where a business sends two invoices for a single transaction. This can occur due to simple errors, like repeated entries or miscommunication, or as part of intentional fraud. Identical purchase order numbers and dates on the invoices often indicate duplication.

In the realm of invoice fraud, double invoicing is a common tactic. Hackers might impersonate a vendor, directing payments to their accounts through fake invoices. Even within companies, unethical practices can lead to overcharging customers. However, most double invoicing cases are unintentional, stemming from administrative oversights rather than malice.

Regardless of intent, double invoicing leads to financial losses, whether through unnecessary payments or as a consequence of fraud. This necessitates stronger internal controls and vigilant verification processes to detect and prevent such errors. The increasing integration of AI and machine learning in financial systems is proving effective in identifying and mitigating such issues, offering a promising solution to this persistent problem.

8 Key Reasons Why You Have Problems With Double Invoicing

Sending multiple unneeded invoices (=duplicate invoices) to clients can lead to a variety of problems.

Clients and vendors can get annoyed because of the multiple invoice send-outs. It reflects poorly on your business as a whole, and if it becomes a repeat problem it could lose your business.

Are you curious about why double invoicing is a problem for your business? Any of the following reasons could be the cause of your duplicate invoices problem.

Double Invoicing problems

1. Improper Invoice Classification

Do you have an easy way to see which invoices have been paid, which need to be sent out, and which ones are past due or unpaid invoices?

If you can’t clearly see the state of your invoices, you’re setting yourself up to have problems with double invoicing. Sometimes invoices get sent out multiple times because people can’t tell that they’ve already been sent.

The easiest way to solve this problem is to come up with a system that easily classifies invoices. There are plenty of invoice software solutions available that can help keep your invoices organized.

2. Bad Bookkeeping

It isn’t unheard of for the occasional double invoice to come out. An isolated mistake isn’t much cause for concern. But when you notice that the problem keeps happening, there may be a bigger problem.

The most common cause of double invoicing can easily be solved by keeping better books.

We know that most businesses have strict rules about how accounting and billing should handle invoices, but do you know if they’re acting following those rules to the letter?

A busy day at the office could mean that someone isn’t double-checking their work or making sure that the right amounts are going out.

Bad bookkeeping can be harmful to your business. If you’re having problems with double invoicing, duplicate payments, or any money matters it’s worth doing an audit of your current system to see how efficient it is.

Once you’re happy with your invoicing system, it’s time to make sure that employees are properly trained on how to follow it.

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3. Duplicate Vendors

In the business world, it isn’t unusual to work with several branches of the same business. This may be common, but it can still cause problems for your bookkeeping system.

Ideally, your accounts payable system should be able to create one vendor master file record for each supplier or business you work with. But it isn’t out of the ordinary to accidentally make multiple invoices for the same client.

Departments can merge as time goes on. It’s possible that you may be sending two or three invoices to the same department.

If you’ve been in business for years, it may be worth going through the addresses and contact information for each client you invoices.

Start by contacting everyone you sent a bill to in the past three months. Eventually, you’ll be able to get rid of information you don’t need, and you can see your instances of duplicate invoices dramatically fall.

4.Multiple Invoicing Methods

In the past, most people would expect to receive an invoice from a business in the mail. But as time went on, more communication methods were added.

For a while, most people would fax an invoice so that it can quickly get to the vendor. Now it isn’t uncommon for most people to do their business online and send their invoices via email.

These are all excellent ways to send invoices, but you shouldn’t be using every single method possible to invoice clients.

Some people like to send multiple invoices as a way to “cover their bases” and ensure that clients receive them. Sending invoices in different ways can confuse clients and create unnecessary paperwork for them to sort through.

Proper invoice management involves coming up with a unified way to send things out.

It can be a good idea to reach out to clients and ask which method of invoicing they prefer. If you’re a small business it’s easier to accommodate different methods.

This can get trickier if you’re a bigger business. It may be easier for you to pick one method you prefer to stick with it for every client.

5. No Checks and Balances

How do you ensure that every invoice you send out is correct? 

It isn’t uncommon for most businesses to trust individual accountants or front desk staff to handle sending out invoices. This may make sending things out faster, but it also leaves you open to double invoicing.

When you expect everyone to handle invoices on an individual level, there’s no way to check that the right amount of invoices are going to the correct people.

You could have someone in accounting sending out the same invoice that someone’s assistant emailed out two days ago.

The easiest way to handle this issue is to have invoices go to a centralized location before they’re sent out so they can be reviewed. One person can be in charge of making sure that invoices are correct, and that there aren’t any duplicate sends.

Ensure your invoice includes all essential elements.

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6. Ignored Invoice Disputes

Incorrect invoices can occasionally go out despite everyone’s best intentions. A client may dispute an amount listed on an invoice, or there may have been an internal error on your end.

If you don’t resolve issues quickly enough, you could have issues with double invoicing.

You may be sending out invoices that don’t reflect the proper amount the client owes. That’s a waste of time for the people handling the invoices, and it could annoy the client.

Whenever there’s an issue with billing or invoicing, make it a priority to resolve it as quickly as possible. If you don’t, it could cause billing issues down the line.

7. Cybersecurity Threats

Cybersecurity threats, like phishing and hacking, can be a big problem. They might let unauthorized people access your invoicing system and cause mistakes in your finances.

To prevent this, you should do some important things to keep your invoicing system safe. Make sure only the right people can log in, regularly check for problems, and teach all your employees how to stay safe online.

By doing these things, you can make your invoicing system strong and protected, avoiding any bad things from happening to it.

Cyber security threats through invoices

8. System Glitches or Software Bugs

Sometimes, your invoicing software or accounting system might have problems, causing it to make more invoices than you want. Glitches or bugs in the system can make it send out the same invoice multiple times by mistake.

To stop this from happening, it’s important to regularly update and take care of your software. Keeping an eye out for any problems that people report, like bugs or issues, is also really important.

In case something goes wrong, having a plan ready to quickly deal with these technical challenges is crucial. This helps prevent any big problems with your finances.

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Stop Creating Duplicate Invoices

Now that you know how to stop double invoicing, it’s time to get the rest of your business on track financially.

Check out our online invoicing software. You can create simple invoices, manage to send them out, and more.

Be sure to keep checking our blog for more finance content for small businesses, and share this post with your friends and professional colleagues.

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Frequently asked questions

How can I prevent double invoicing in my small business?

Make sure you classify invoices correctly, keep accurate records, and use one consistent invoicing method. Also, watch out for cybersecurity threats, fix any system issues, and put checks in place.

What steps to take on discovering a cybersecurity threat in my invoicing system?

Quickly update security, change your login details, and check your system thoroughly. Teach your employees about spotting and stopping phishing attacks to keep unauthorized people out and avoid double invoicing risks.

How to streamline invoicing methods without confusing clients?

Talk to your clients about their preferences, use one invoicing approach, and keep them informed about how you prefer to send invoices to make things more efficient.

Is using multiple invoicing methods advisable to ensure clients receive invoices?

While it's good to be flexible, using too many methods can be confusing. Ask your clients about their preferred way and try to use the same method consistently to avoid possible double invoicing issues.

How to establish effective checks and balances for accurate invoicing?

Keep the invoicing process in one place, assign someone to review it, and set up a system to carefully check invoices before sending them out. This helps maintain accuracy and avoids problems with double invoicing.

Is Double Invoicing Considered Money Laundering?

No, double invoicing itself is not considered money laundering. Money laundering involves concealing the origins of illegally obtained money, typically through a complex sequence of banking transfers and transactions.

Double invoicing, on the other hand, usually results from administrative errors or, in some cases, intentional fraud. However, it's important to note that if double invoicing is used as a method to facilitate money laundering or any other illegal financial activity, then it could be associated with money laundering in that context.

Is It Legal to Change an Invoice?

Yes, it is legal to change an invoice, but there are specific conditions that must be met. Amendments to an invoice are permissible when correcting errors, updating information, or reflecting agreed changes in the transaction terms.

However, it's crucial to maintain transparency in the process. Both parties involved should agree to the changes, and the revised invoice should clearly indicate what modifications were made and why.

Invoices should not be altered for deceptive purposes, as this can lead to legal issues and breach of contract. Proper documentation and communication are key when modifying an invoice.

DAVID FAČKO

SEO Specialist at Billdu

David Fačko specializes in SEO and Content at Billdu, a highly-regarded invoicing software solution known for its efficiency in assisting freelancers and small businesses worldwide.